THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN
UNION (WITHDRAWAL) ACT 2018). UPON THE PUBLICATION OF THIS
ANNOUNCEMENT THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE WITHIN
THE PUBLIC DOMAIN.
7 February 2024
Tern Plc
("Tern" or the
"Company")
Device Authority Fund
Raise
Second Closing of Tranche
One
Further to its announcements on 27
December 2023 and 28 December 2023, Tern Plc (AIM:TERN),
the investment company specialising in supporting
high growth, early-stage, disruptive Internet of Things ("IoT")
technology businesses, announces that Device Authority
Limited ("Device Authority"), a company in which Tern had a
35.7% shareholding at 28 December 2023, has
completed an additional Second Closing of Tranche One ("T1") (the
"Second Closing") of the Series B type fundraising round (the
"Fundraising"), securing a further US$2.0 million in new equity
investment from Mercato Partners, a private equity firm in
Cottonwood Heights, Utah, USA.
Highlights
·
Device Authority and the investor group in the
first closing from late December 2023 (T1) have agreed to a further
US$2.0 million to be invested in addition to the planned US$7.3
million Fundraising announced on 27 December 2023. This brings the
new planned total Fundraising to US$9.3 million. The US$2.0 million
Second Closing has been secured and is in addition to the US$3.7
million from Ten Eleven Ventures and US$0.3 million from Alsop
Louie Capital 3, L.P via conversion of short-term loans secured in
the first closing of T1 on 28 December 2023.
·
The total Device Authority Fundraising remains
intended to provide Device Authority with sufficient funding to
enable it to grow in line with its strategy beyond the end of
2024. This encompasses the expansion of its
activities in the United States.
·
From completion of Second Closing of T1 of the
Device Authority Fundraising, Tern now holds 31.7% of Device Authority's equity (before any dilution on exercise of share options),
valued at approximately US$7.5m (approximately
£6.0m) at the valuation implied by the
Device Authority Fundraising issue price.
·
On acceptance of the National Security and
Investment Act 2021 ("NSIA") approval by Ten Eleven Ventures and
completion of Tranche Two ("T2") of the Device Authority
Fundraising (as announced on 27 December 2023), Tern will hold
26.7% of Device Authority's equity (before any dilution on exercise
of share options), which would be valued at approximately
US$7.2 million (approximately £5.7 million)
at the valuation implied by the Device Authority Fundraising issue
price.
·
Device Authority has been in the process of making
non-executive director additions to its Board, with recent
appointments including:
o Dave
Palmer, General Partner of Ten Eleven Ventures and co-founder and
former Chief Product Officer of Darktrace;
o As
Device Authority's new Chairman, Tim Eades, Chief Executive Officer and Co-Founder at Anetac and a General
Partner and Fellow Founder of Cyber Mentor Fund.
A 20 year cyber security Silicon Valley serial
entrepreneur; and
o Grace Cassy, co-founder of cybersecurity investment firm CyLon
Ventures and former foreign policy advisor to UK Prime Minister
Tony Blair.
Commenting Ian Ritchie, Chairman of Tern,
said: "We are pleased with Device
Authority's ability to attract high calibre US investors as it
continues to secure new logos. Device Authority's progress will be
further accelerated with this significant investment from another
US investor and the additional funding will allow Device Authority
the flexibility to be more opportunistic in the
marketplace.
"We believe the additional capital and resources from Mercato
Capital will enable a broader expansion of Device Authority's
go-to-market programs in the US that we believe will ultimately
have an effect on the multiples for exit valuations. The global
cyber security market segment is continuing to experience
double digit growth and establishing a substantial presence in the
US should result in a greater return for Tern's
shareholders.
"Mercato Partners has a history of providing operational
support to develop technology businesses to the
stage when a valuable exit can be achieved. We look forward to
working with the Mercato team and the other investors in the
syndicate to accelerate the growth of the business to maximise
the investment value for Tern shareholders. I look
forward to making further announcements in due
course."
Device Authority Series B type Fund raise
Prior to the Second Closing, Tern
had a holding of 35.7% in Device Authority. As at 30 June 2023, the
date of Tern's last published book valuation in its interim
results, this investment had an unaudited book value of £11.9
million.
Device Authority has secured US$2.0
million in new equity investment from Mercato Partners in the
Second Closing. The remaining T2 of US$3.3 million, remains
contingent on approval pursuant to the NASI and acceptance of the
approval by Ten Eleven Ventures. T2 will be completed at
such date as may be notified by Ten Eleven
Ventures (in their absolute discretion) to Device Authority on or
prior to 30 September 2024, provided that such date shall be: (i)
no earlier than the fifth Business Day after NSIA approval has been
obtained; and (ii) no later than the fifth Business Day after the
date that Device Authority was notified by Ten Eleven
Ventures.
Following the Second Closing of the
Fundraising, Device Authority is now valued in total, at the price
implied by the Device Authority Fundraising, at US$23.7 million on
a post-money basis and Tern will have a holding of 31.7% in Device
Authority (before any dilution on exercise of share options), with
an unaudited book valuation of approximately US$7.5 million
(approximately £6.0 million).
On acceptance of the NSIA approval
by Ten Eleven Ventures, Device Authority
will be valued in total, at the price implied by the Device
Authority Fundraising, at US$27 million on a post-money basis and
Tern will hold 26.7% of Device Authority's equity (before any
dilution on exercise of share options), which would have an
unaudited book valuation of approximately US$7.2 million
(approximately £5.7 million) at the valuation implied by the Device
Authority Fundraising issue price.
Further information on Device Authority
Device Authority is a global leader
in Identity and Access Management ("IAM") for the IoT; focused on
the automotive, medical device ("IoMT") and industrial ("IIoT")
sectors. Device Authority's KeyScaler™ platform provides zero touch
provisioning and complete automated lifecycle management for
securing IoT devices and data at scale, with frictionless
deployment across device provisioning, authentication, credential
management, policy based end-to-end data security/encryption and
secure OTA (over the air) and HSM (hardware security module)
updates.
Device Authority has recently
received recognition of its market position, being positioned, for
the fifth year in a row, as a 'Leader' in the 2023 SPARK Matrix™
for IoT Identity and Access Management (IoT IAM) released by
Quadrant Knowledge Solutions on 11 December 2023.
Device Authority also won the 'IoT
Security Champion' award at the recent TechWorks Awards held in
Manchester on 7 December 2023.
Based on Device Authority's latest
statutory accounts for the year ended 31 December 2022, as at that
date it had net assets of £1,257,622 and incurred a loss for the
year of £2,566,776. Given the historic nature of these figures Tern
does not consider this to be representative of the current business
and trading performance of Device Authority.
Further Information on Mercato Partners
Mercato Partners is a growth-stage
venture capital firm that invests in and partners with innovative
technology and consumer product companies. The firm provides
capital, operational support, and strategic guidance to help
entrepreneurs scale their businesses and achieve their full
potential. With a focus on early-stage companies, Mercato Partners
is dedicated to helping visionary entrepreneurs bring their
products and services to market and achieve long-term
success.
Further information on Mercato
Partners may be found at: https://www.mercatopartners.com
Enquiries
Tern Plc
Ian Ritchie (Chairman)
|
via IFC Advisory
|
Allenby Capital Limited
(Nominated Adviser and
Broker)
Alex Brearley / Dan Dearden-Williams
(Corporate Finance)
Kelly Gardiner / Guy McDougall
(Sales and Corporate Broking)
|
Tel: 0203 328 5656
|
IFC
Advisory
(Financial PR and IR)
Tim Metcalfe
Graham Herring
Florence Chandler
|
Tel: 0203 934 6630
tern@investor-focus.co.uk
|